Cryptocurrency gained a lot of traction during 2021, with many more people getting involved in the investing. What does this mean for the IRS?
Starting this year, after cryptocurrency really took off last year, people will need to report gains to the government.
There have been rules surrounding digital currency since 2014.
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Cryptocurrency, virtual currency, and the IRS
With rules around virtual currency, people want to know if crypto is considered virtual currency.
The agency considers virtual currency to be something that can be substituted for and converted into real currency.
When it’s reported to the IRS, it is considered property and an asset.
Crypto differs from other virtual currencies because it’s run through a blockchain.
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How to report your crypto to the IRS
The currency will need to be reported when it’s sold, like any other asset.
The handling of crypto such as Bitcoin and Ether is similar to stocks.
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